Wal-Mart stock wobbled a few weeks ago on a New York Times investigation said top company officials had failed to pursue bribery allegations. Today CalSTRS, the California teachers’ retirement system, said it will vote against all current Wal-Mart board members because of poor oversight. CalSTRS holds 5.3 million shares.

But, despite the controversy, Wal-Mart’s first quarter report vaulted the stock to new levels. the company continues to grow same store sale sin the U.S.

Wal-Mart (WMT) shares are back where they were before the New York Times published a lengthy investigation in late April on the company’s response to bribery allegations at its Mexico subsidiary. The stock, which had crested above $62 per share, quickly fell below $58 after the story.

But this morning, a strong first quarter report has put those concerns on the back-burner, sending Wal-Mart shares up 4.9% to $62.09.

Wal-Mart beat even its own guidance, posting $1.09 of EPS, ahead of its range of $1.01 to $1.06. Analysts had been expecting $1.04.

Stock futures were trading right around break-even on Thursday, as negative news out of Europe cancelled out some generally upbeat data and earnings results in the U.S. The Dow has fallen for four days in a row.

Yields on Spanish bonds rose in an otherwise successful bond auction, and a report out of Spain said Moody’s told some Spanish banks they will receive a downgrade. Britain’s FTSE 100 was down 1.3% and the Stoxx Europe 600 was off by 1%. The Euro slipped below $1.27 against the dollar.

In the U.S., weekly jobless claims came in at 370,000 flat with the prior week. After the release of the jobs numbers, index futures trimmed their declines.

Berkshire Hathaway (BRKB) added General Motors (GM) to its portfolio in the first quarter, buying up 10 million shares as of March 31, according to an SEC filing released after the market closed. Buffett also took a stake in Viacom (VIAB), adding 1.6 million shares.

Buffett also upped his stake in Wal-Mart Stores (WMT) to nearly 47 million shares from 39 million at the end of the previous quarter.

Some of Buffett’s holdings were kept confidential, under an SEC rule that allows investors to keep some of their bets private for a certain period of time. Buffett was able to delay disclosure of his IBM (IBM) stake last year using the same rule.

Wal-Mart Stores (WMT) was rocked this weekend by a lengthy New York Times investigation that said top executives had failed to pursue credible allegations of widespread bribery at Wal-Mart de Mexico in the mid-2000′s. The company is now conducting its own investigation of the bribery claims and has alerted the Justice Department and the SEC.

In a statement, the company stresses that the allegations are six years old. But much of Wal-Mart’s top leadership is mentioned in the Times story, and not in favorable terms. That’s helping push the stock down 4.1% this morning.

As NBG Productions Strategist Brian Sozzi notes, Wal-Mart had put “headline risk” behind it in the past few years, after years of news about labor discord and other controversies. The scandal raises all sorts of questions, writes Sozzi.

Are costs associated with its Mexican stores properly accounted for?

Will CEO Mike Duke, who was involved in the company’s response to the Mexico allegations, make it through the scandal? Will it affect Vice Chairman Eduardo Castro-Wright, who is scheduled to retire on July 1?

About 20% of the Wal-Mart’s stores are in Mexico; will this stall growth in the country, or otherwise hinder the company’s international expansion plans?

The company could also get hit by a large financial penalty. An analyst quoted by Bloomberg notes that penalties resulting from violations of the Foreign Corrupt Practices Act tend to amount about 1% to 2% of sales, which would be $4.5 billion to $9 billion in Wal-Mart’s case. (In 2011, Wal-Mart’s net income was $15.7 billion.)

All those questions aside, Citi analyst Deborah Weinswig is convinced that the company will make it out okay.

“While it remains too early to know the validity or repercussions of the bribery allegations published in The New York Times on April 21, we believe WMT is dedicated to a thorough and transparent review after discussions with the company. We would use any weakness in the stock as an enhanced buying opportunity.”

Shares of Wal-Mart (WMT) were recently down 0.2%, but Barclays analyst Robert Drbul sees the stock reaching $65 on the robust outlook of its international arm.

Drbul attended the company’s International Meeting in Toronto and noted that Wal-Mart has made impressive strides in the Great White North, reaching nine out of ten Canadians, and yet still has runways for growth ahead of it, as it adjusts to Canada’s changing demographics and shopping habits.

Here are highlights from his note:

Walmart International strives to drive growth through increases in comp store sales, store expansion, e-commerce initiatives, and acquisitions, while continuing to transition its remaining geographies to the EDLP model. We believe one of the greatest opportunities to improve leverage internationally will be managing inventory growth toward a target rate of half the rate of sales. The company is targeting at least 300 bps of improvement in ROI by 2017. Walmart entered the Canadian market in 1994, and today 9 out of 10 Canadians shop at Walmart. The Canadian retail market shares many similarities with the US, enabling the leverage of Walmart US programs and processes, but it also has some important distinctions. In fact, there is only a 20% SKU overlap between Walmart Canada and US. The Canadian consumer typically places a large emphasis on value (high participation in loyalty programs, shopping for best price as a “hobby”), has an emerging minority population which is expected to account for 70% of growth in consumer spending in the next 10 years, has a higher average level of household debt, and has been slower to embrace online shopping.

In order to cater to these characteristics, Walmart Canada has worked to tailor its assortment to the diverse customer groups it serves, while maintaining opening price points in order deliver the highest amount of value driving an 11% price gap on a like-for-like basket of goods. An important aspect of this strategy is carrying a broad private label offering in stores. Walmart Canada aims to double the penetration of its private label sales by 2015. The company has already switched to a mono-brand private label strategy for apparel (George), so the majority of this growth is expected to come from food and other general merchandise.

Jefferies analyst Daniel Binder upgraded Target (TGT) to Buy from Hold today as he expects the company to turn the page on some difficult quarters. Binder notes that Target’s same-store sales in February outpaced expectations for 4% growth in the quarter, and the costs to expand into Canada will likely peak this year.

What’s more, top competitor Wal-Mart (WMT) appears to making “less aggressive price investment[s],” meaning consumers may still see Target as a relative value.

In fact, the company appears to have successfully moved past its weak fourth quarter earnings report, Binder argues.

“After a poor holiday season and disappointing Q4 period, Target’s business has rebounded in recent months as promotions have eased, particularly in categories that over indexed in the mix in Q4. We believe some of this improvement is explained by favorable weather, but broad-based strength and a weather adjustment suggests it is more.”

Wal-Mart (WMT) stock showed more weakness on Wednesday, after investors punished the stock on Tuesday following a mixed earnings report. Wal-Mart has successfully grown its same-store sales in the U.S. for two quarters in a row, but investors are concerned that the company is sacrificing gross margin to push products out the door. Shares are down 5.9% over the past two days. The stock was trading above $62 per share on Friday, but is down below $59 today.

“Wal-Mart U.S. segment margins contracted 10 bps to 8.4%, resulting in decelerating EBIT growth of 1.4% as price investments were not offset by expense reductions and sales leverage,” wrote Susquehanna analyst Bob Summers.

Summers, who thinks the stock is worth buying, noted also that on a two-year basis the same-store sales numbers are less impressive.

“While moderately encouraging that same-store sales improved 20 basis points sequentially and traffic turned positive, the two-year stacked figure decelerated 30 basis points. Further, we thought the combination of an easier comparison (4Q12 comparison was 50 bps easier than 3Q12) and price investments would have driven a stronger acceleration. Nevertheless, we continue to believe that the Wal-Mart U.S. business is pointing in the right direction and anticipate sustained improvement over the next 12 months.”

Raymond James analyst Budd Bugatch also noted that the company’s international results lagged. He downgraded the shares to Market Perform from Strong Buy.

“Walmart’s domestic operations performed relatively well in F4Q. Comp-store sales,
total sales, and operating income at both Walmart U.S. and Sam’s Club were essentially in line with our expectations. The International
segment, however, reported sales of $35.5 billion compared with our estimate of $36.9 billion and adjusted operating income of $2.2 billion
versus our estimate of $2.3 billion. Despite its rapid growth, the International segment continues to work towards improving profitability
and returns.”

For the second quarter in a row, Wal-Mart Stores (WMT) posted an increase in same-store sales at its U.S. stores. In fact, the 1.5% growth was its best result in nine quarters.

But investor expectations for the retail behemoth have risen, and the stock was trading near its September 2008 highs before the report. The company posted $1.44 in core EPS, a penny below expectations. Shares fell 4% early.

“Wal-Mart’s two quarters of positive domestic same-store sales are coming at the expenses of gross margin,” notes Brian Sozzi, chief equities analyst at NBG Productions. “Management is very focused on driving home its price leadership message, and this ultimately was displayed in an overall gross margin miss in the quarter (24.28% versus 24.61% consensus) plus a full year compression in return on invested capital.”

The market may also be reacting to Wal-Mart’s fiscal 2012 guidance range ($4.72 to $4.92), which encompassed expectations of $4.90, but was on the lighter end.

“Wal-Mart’s fiscal year guidance implies continued investments in price, globally, will require time before they meaningfully impact net profits in a positive manner,” Sozzi wrote.

But Citi analyst Deborah Weinswig urged investors to stick with the stock.

“While WMT’s overall EPS miss may disappoint some investors, we believe the continued momentum (especially in its Walmart U.S. business) demonstrates that the company’s initiatives are gaining traction.”

European finance ministers agreed to pump 130 billion Euros into the Greek economy as part of a second bailout, and private investors will be forced to take a 53% haircut on the value of their holdings. The deal helped send U.S. futures higher after markets were closed on Monday in observance of President’s Day. In Europe, which saw stocks rise in anticipation of the bailout on Monday, most indexes showed weakness on Tuesday.

Nymex oil futures rose 2.5% to just under $105 per barrel after Iran refused to ship France and Britain oil and threatened to also stop selling to other nations, in response to sanctions from those countries.

Wal-Mart (WMT) fell 3% in pre-market trading after reporting declining earnings. Home Depot (HD) rose 2.8% on better than expected earnings. Kraft (KFT) rose 1% after posting earnings that were in line with analysts’ expectations.

Correction: This post originally said incorrectly that the bailout was 30 billion Euros.

About Stocks To Watch

Earnings reports, corporate strategies and analyst insights are all part of what moves stocks, and they’re all covered by the Stocks to Watch blog. We also look at macro issues, investor sentiments and hidden trends that are affecting the market. Stocks to Watch gives you the full picture of the U.S. stock markets, all day long.

The blog is written by Ben Levisohn, a former stock trader who has covered financial markets for the Wall Street Journal, Bloomberg and BusinessWeek.